Selecting a tenant for your retail property/ tenant mix
If you own a retail property, as a landlord you need to be very selective on who you lease the space to. Any space that has a high tenant turnover is normally considered jinxed and other retailers/tenants avoid the property.
If you are looking a buying a retail property this is also very relevant as sellers tend to fill the spaces up just to show 100% occuancy! When buying look at the tenant mix.
The number one reason why retail stores go out of business is because of location. Be really serious about this for a second. The number one reason retail operations go out of business is because of location, not because of some terrible inventory that the tenant had or some bad weather or a bad employee. It's the location.
How do we know which tenant is best suited for your location?
Ask your yourself the following questions:
1. What kind of retail center do you own?
2. Will anchor's if any will help?
3. If yes, what type of anchor and what kind of business will they help? How will being next to a supermarket, a post office, a bank, a popular restaurant help? Yes while all of these places have inherited traffic, do they attract the kind of people that will shop at your tenant's business or eat in their restaurant?. For example, would an upscale restaurant do well next to a Walmart?
4. How wide is your property's trade area? A convenience store will not have regular customers from 25 miles away, while a Red Lobster restaurant might.
Retail Property Types:
Property Type: Regional Mall
Concept: General merchandise or fashion-oriented offerings. Typically, enclosed with inward-facing stores connected by a common walkway. Parking surrounds the outside perimeter.
Typical Type of Anchors: Full-line or junior department store, mass merchant, discount department store and/or fashion apparel store.
Trade Area Size: 5-15 miles
Property Type: Super-Regional
Concept: Mall Similar in concept to regional malls, but offering more variety and assortment.
Typical Type of Anchors: Full-line or junior department store, mass merchant, discount department store and/or fashion apparel store.
Trade Area Size: 5-25 miles
Property Type: Community Center ("Large Neighborhood Center")
Concept: General merchandise or convenience-oriented offerings. Wider range of apparel and other soft goods offerings than neighborhood centers. The center is usually configured in a straight line as a strip, or may be laid out in an L or U shape, depending on the site and design.
Typical Type of Anchors: Discount store, supermarket, drug, large-specialty discount (toys, books, electronics, home improvement/furnishings or sporting goods, etc.)
Trade Area Size: 3-6 miles
Property Type: Neighborhood Center
Concept: Convenience oriented.
Typical Type of Anchors: Supermarkets like Giant Eagle or Kroger
Trade Area Size: 3 miles
Property Type: Strip/Convenience
Concept: Attached row of stores or service outlets managed as a coherent retail entity, with on-site parking usually located in front of the stores. Open canopies may connect the storefronts, but a strip center does not have enclosed walkways linking the stores. A strip center may be configured in a straight line, or have an "L" or "U" shape. A
Typical Type of Anchors: Anchor-less or a small convenience store anchor.
Trade Area Size: <1 mile
Property Type: Power Center
Concept: Category-dominant anchors, including discount department stores, off-price stores, wholesale clubs, with only a few small tenants.
Typical Type of Anchors: Category killers, such as home improvement, discount department, warehouse club and off-price stores
Trade Area Size: 5-10 miles
Property Type: Lifestyle
Concept: Upscale national-chain specialty stores with dining and entertainment in an outdoor setting.
Typical Type of Anchors: Large format upscale specialty
Trade Area Size: 8-12 miles
Property Type: Factory Outlet
Concept: Manufacturers' and retailers' outlet stores selling brand-name goods at a discount.
Typical Type of Anchors: Manufacturers' and retailers' outlets
Trade Area Size: 25-75 miles
Property Type: Theme/Festival
Concept: Leisure, tourist, retail and service-oriented offerings with entertainment as a unifying theme. Often located in urban areas, they may be adapted from older--sometimes historic--buildings and can be part of a mixed-use project.
Typical Type of Anchors: Restaurants, entertainment
Trade Area Size: 25-75 miles